In most companies, “infrastructure” and “cloud” have become synonymous with high monthly bills.
By Richard Vester, chief executive: cloud at iOCO
Despite the fact that no business today can operate without their cloud ecosystems, what was once considered an engine for innovation has become a line item growing across every function.
And, despite the fact that the cloud powers marketing campaigns, data analytics, customer experiences, and product development, cloud spend is treated as an IT or finance problem.
That mindset is outdated, and expensive. Cloud spend reflects business activity, and the entire business must get involved in owning cloud usage and cost visibility to stop runaway cloud costs and wasted resources. Companies that allow teams to own their cloud spend will make smarter, more informed decisions aligned to business value.
Cloud decisions are business decisions
Whether it’s choosing a database tier or enabling new regions, cloud decisions are business decisions with financial consequences. In most companies, workloads are often driven and scaled by individual teams (and so are their costs), but only IT is responsible for monitoring spend. If marketing spins up expensive data environments, developers leave unused instances running, and data teams store and process terabytes without considering lifecycle, it becomes close to impossible for the IT department to keep track of the various costs before they become a budget headache.
Cloud budget overruns don’t have a singular cause. In fact, the bulk of cloud waste is the direct result of a simple lack of awareness, as different teams and departments try to gain the benefits promised by the many cloud tools easily available to them. With 60% of organisations running over half of their workloads in the cloud, it’s easy to see how cloud costs can spiral out of control.
The 2024 State of Cloud Cost Intelligence Report shows that only 30% of surveyed organisations knew where their cloud budget was going exactly – a truly grim picture of cost attribution in the cloud. PwC research paints a similarly gloomy picture: 49% of business leaders cite measuring value as a major barrier to achieving cloud ROI, and 48% of CFOs lack confidence in their ability to measure cloud ROI.
Considering that a cloud bill can comprise hundreds of millions or billions of rows of data, expecting IT or finance to keep track of what each department is spending is an exercise in futility. Current estimates put cloud waste at around 30% of companies’ cloud budgets, but pinpointing exactly where that waste is coming from can’t be achieved by analysing line items on an invoice.
Closing the financial black hole
The challenges around managing cloud spend have resulted in a multitude of optimisation strategies, but these only yield limited results. Instead of following a centralised cost management strategy, companies should empower the teams that are driving up costs to accept responsibility.
Every team should ask if a workload is still needed, if there is a more cost-effective way to achieve their goal, and whether they are getting the value they expect for their spend. When teams are empowered to ask these questions, cloud investments become intentional, not accidental. This will allow them to identify which processes or products consume the most cloud resources, analyse each one’s return on investment, and cut their spending in favour of the best performers.
This approach will not only create a culture of accountability, it will establish a foundation that will allow the business to start creating a balance between cost and value. Cloud cost management belongs in every department because every department shapes how your business uses the cloud.
When teams share accountability, cost becomes a business enabler, not an obstacle to growth.
The end result is that the organisation’s cloud spend will finally deliver on its promise of innovation, not just a financial black hole.